Magazine article Public Finance

Burning Questions

Magazine article Public Finance

Burning Questions

Article excerpt

LOCAL GOVERNMENT NEEDS to save money while improving services, a difficult task at the best of times and particularly hard in a recession. But this can be achieved through real devolution to and empowerment of the sector.

In Bold steps to radical reform, a paper for the Localis think-tank published this week, I argue that significant cash savings can be made by streamlining local government's relationship with Whitehall and removing the unnecessary and expensive bureaucracy associated with the majority of regional government and quangos.

This can be achieved by accelerating a major 'control shift', transferring their functions back to democratically elected local government.

I believe that through a combination of efficiency programmes; taking the Total Place initiative to the next level; streamlining activity; and removing unnecessary regional and quango bodies, we could save the taxpayer £15bn-£2lbn in the medium term, or just short of 2% of gross domestic product.

Fundamental to achieving this would be a new and transformed relationship between central and local government. I am proposing devolution of regional and national powers to local government in 46 suggested sub-national areas, based on city and shire county boundaries. These would respect current statutory duties and coterminus operations with other public agencies.

By organising ourselves at this spatial level, we can give ministers the confidence that we have both the structural capacity to take on a range of devolved functions and the scale to drive through significant efficiencies and cost savings.

One of the arguments in favour of establishing the existing regional structure was the sheer impossibility of central government liaising/devolving to 360 local authorities. But there are about 46 city and county sub-regions in England, a manageable number for central government to empower and devolve to, with powers going to the family of local government in that area.

Under the principle of subsidiarity, districts and boroughs, towns and parishes (clustered together and working with their city/county where appropriate) would all be empowered, bringing decision-making much closer to the citizen or resident.

We must also move back to the original intention at the core of the first Local Public Service Agreement - a bilateral contract between central and local government. This would allow a serious debate with central government about the longer-term public policy outcomes facing our local communities, rather than simply being subject to the micro-management of short-term targets. Underpinning each contract should be the aspiration to continue to transform local public services and become more outcome-focused and customer-centric.

During the last Spending Review period, councils made great strides on efficiency - releasing more than £4bn worth of efficiency savings. Under the current spending round, councils expect to free a further £5.5bn by 2011. In Kent County Council alone, we have made more than £123m in savings in the past four years. Like many other local authorities, our performance has gone above and beyond the government's required targets.

However, despite this performance, England's system of government has become more and more centralised over the past 30 years. Early findings from the Total Place pilots suggest that councils and councillors were directly responsible for only 5% of the totality of public spending in local areas.

This amounts to just £350 of the £7,000 spent for every person in the country on these services.

Yet many regional quangos simply duplicate activity in Whitehall and invent their own bureaucracies, leading to waste and inefficiency.

Strategic health authorities currently cost the taxpayer £5.4bn per annum. Government Offices for the English Regions are responsible for managing or influencing some £9bn worth of government expenditure. Their running costs are now more than £143m - a rise of 74% since 1997. …

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